Pumping Iron at the Cliffs

890 words 4 pages
This report contains an evaluation of the Circored Iron Reduction Plant in Trinidad. An analysis of the current processes and costs are weighed against the reality of unexpected downturn in market prices for DRI. A final proposal and recommendation for the future of the plant will be outlined.
This report contains an evaluation of the Circored Iron Reduction Plant in Trinidad. An analysis of the current processes and costs are weighed against the reality of unexpected downturn in market prices for DRI. A final proposal and recommendation for the future of the plant will be outlined.
The Circored Iron Ore reduction plant in trinidad
The Circored Iron Ore reduction plant in trinidad
Pumping iron at Cliffs & associates
Pumping
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At this price ($113 / ton), the probability of future operating profitability increases to over 60% based on current HBI pricing forecasts. In our most likely scenario we would use a cold idle status, make our yield improvements and other process improvements in 2002, transition to full-rate processing in 2003 (though at an operating loss, that loss would be less than the fixed cost of maintaining cold idle status and we could validate the efficacy of our improvements) and return to operating profitability in 2004. In a Best case scenario, we would return to operating profitability in 2003 and would earn a three-year operating profit of $11.2M.
Exhibit 1

Historical Prices for HBI and estimated probability for future price scenarios.
Exhibit 2

Price intervals ([From, To]) and their estimated probability of occurrence for the future. The estimate is based on the assumption that future prices will follow the same distribution as historical prices; based on this assumption, the table summarized the frequency of historical price scenarios as a forecast for future price scenarios.
Exhibit 3
Probability of Future Profitability: Current State ($131): 50% Improved State ($123): 57% Optimal

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